Experts See Initial Impact of Rent Law as Minimal

By CLIFFORD J. LEVY

Published: June 22, 2003

Aday after tenant groups were outmaneuvered in a last-minute battle over rent regulations in Albany, some housing experts predicted yesterday that the new law would have little immediate effect on the apartment market in New York City.

The significance of the law, the experts said, is its extension of a six-year-old rule that allows landlords to charge market prices for the most expensive regulated units after they are vacated.

Tenant groups had lobbied aggressively to weaken the rule, contending that over time it would spell the end of the system of rent regulation, which has lasted for decades. Landlords countered that the threshold was so high, allowing decontrol only of vacated apartments renting for at least $2,000 a month, that the people who could afford such prices did not deserve legal protections.

In the end, the Republican majority in the State Senate, which has traditionally been allied with landlords, pushed through a measure in the final hours of the legislative session that largely kept the 1997 rule intact, and then adjourned for the summer. Gov. George E. Pataki, a Republican, supported the move.

Leaders of the Democratic-controlled Assembly, who had wanted to increase the threshold or do away with it, at the behest of tenant groups, felt they had no choice but to approve the Senate measure because all rent regulations would have otherwise expired.

"This won't have a major impact on tenants, beyond the impact that the 1997 law has already had," said Prof. Michael H. Schill, director of the Furman Center for Real Estate and Urban Policy at New York University. "What you are going to see over time is that more apartments upon vacancy will rent for more than $2,000 and therefore will be deregulated. But that is not a major change."

It is to some extent an indication of how the political landscape has evolved that the outcome was perceived as a victory for landlords even though they did not succeed in getting lawmakers to adopt new provisions that erode rent regulations. In 1997, the Senate majority leader, Joseph L. Bruno, called for virtually abolishing all rent regulations, touching off a spirited months-long battle in Albany before he capitulated, gaining only the decontrol provisions.

This year, Mr. Bruno, seemingly scarred by the earlier fight, sought only to defend those provisions, with a few small exceptions. He was able to add a clause that seems to limit the power of the City Council, which has been friendly to tenants, to wield influence over the rent regulations.

There are more than one million rent-regulated apartments in New York State, the vast majority of them in the city, and Democratic lawmakers and tenant groups have asserted that the Senate legislation would lead to the deregulation of more than 300,000 apartments over the next decade.

But Professor Schill and other housing analysts questioned that figure, saying it was most likely too high. Still, they acknowledged that given the complexity of the city's housing market, it is extremely difficult to assess the effect of these regulations over time.

The experts also noted that the debate over the future of the system largely affects Manhattan apartments. In the other boroughs, regulated prices on apartments are often at the same level or higher than the market price.

The new law extends the rent regulations for eight years, which is longer than previous ones did. Tenant groups described that as a defeat, saying that it is all but impossible to reopen the debate on the luxury-decontrol provisions in the Legislature if the law is not about to expire.

But some housing experts said they were pleased that there would be a lengthy period without rent squabbles. They said that whenever the law expires, anxiety rises among tenants and Albany cannot focus on other housing issues, including finding ways of building more apartments for the poor.

"I think that this is going to be portrayed as a victory for landlords," said Frank Braconi, executive director of the Citizens Housing and Planning Council, a policy research group in Manhattan. "But it seems to me that eight more years of rent stabilization for the vast majority of tenants, without having to worry about all this last-minute brinkmanship, is a good thing."